A Company Limited by Guarantee (CLG) in Kenya is a special type of legal structure designed mainly for non-profit organizations such as charitable foundations, community-based organizations, NGOs, clubs, and membership associations. Unlike companies limited by shares, a CLG does not have share capital or shareholders. Instead, it is owned by guarantors (members) who agree to contribute a nominal amount, usually Ksh 100, in case the company is wound up.
According to the Kenyan Companies Act, 2015, a company is limited by guarantee if:
- It does not have a share capital.
- The liability of its members is limited to the amount the members undertake to contribute in case of liquidation.
- The certificate of incorporation states that it is a company limited by guarantee.
Any surplus income generated by the organization is reinvested to achieve its non-profit objectives and cannot be distributed as dividends to members.
Common Uses of a Company Limited by Guarantee
Companies Limited by Guarantee in Kenya are typically registered for:
- Charitable Foundations
- Non-Governmental Organizations (NGOs)
- Trusts and Foundations
- Sports Clubs
- Professional or Membership Associations
- Community-based and Common Interest Groups
Requirements for Registration of a Company Limited by Guarantee in Kenya
To register a CLG in Kenya, the following documents and information are required:
- Three proposed company names (in order of preference) for reservation.
- Clear statement of the non-profit objectives of the company.
- Details of directors and guarantors (at least two).
- Copy of National ID or Passport, KRA PIN certificate, and a recent passport photo for each director/guarantor.
- Residential address of each director/guarantor including estate, road, town, and county.
- Company contact details (email, telephone number, and postal address).
- Proposed physical address of the company (building/plot number, road, town, and county).
- Memorandum and Articles of Association including the Statement of Guarantee.
Procedure for Registering a Company Limited by Guarantee
The process is carried out on the eCitizen Business Registration Service (BRS) Portal and includes:
- Name Reservation – Submit 3 proposed names for approval by the Registrar of Companies.
- Preparation of Incorporation Forms:
- Form CR1 – Application to register a company.
- Form CR3 – Memorandum for a company limited by guarantee.
- Form CR6 – Notice of appointment of directors.
- Form CR8 – Notice of residential addresses of directors.
- Application to dispense with the word “Limited” (if registering as a foundation).
- Submission and Payment of Fees – Filing fee of Ksh 10,650 (excluding legal/professional charges).
- Security Vetting – The National Intelligence Service (NIS) vets all directors and may conduct interviews.
- Issuance of Incorporation Documents – Upon approval, you receive:
- Certificate of Incorporation
- CR12 (list of directors/guarantors)
- License under Section 55 (if applicable)
Cost of Registration
The official government filing cost for a Company Limited by Guarantee is Ksh 10,650. This excludes professional/legal fees which typically range between Ksh 50,000 – 70,000 depending on the complexity of the registration and compliance support required.
Vetting and Timelines
Due to the mandatory NIS vetting process, the registration timeline is usually 4 to 6 months, though it can extend up to 8 months depending on the volume of applications.
Tax Registration and Exemption
Once registered, the company must obtain a KRA PIN. Non-profits may apply for income tax exemption under the Income Tax Act. If approved, the Kenya Revenue Authority issues a Tax Exemption Certificate valid for 5 years (renewable).
Post-Registration Compliance Requirements
After incorporation, a CLG must comply with annual statutory obligations, including:
- Holding Board meetings and Annual General Meetings (AGMs).
- Preparation and filing of annual returns with audited accounts.
- Filing notices of appointment or resignation of directors.
- Engaging a qualified company secretary.
- Opening a bank account in the company’s name.
Advantages of a Company Limited by Guarantee in Kenya
- Separate legal identity – Can own assets and enter contracts.
- Limited liability – Members are only liable up to their guarantee amount.
- Credibility – Recognized as a legitimate non-profit entity.
- Eligibility for grants and donor funding.
- Perpetual succession – Continues to exist regardless of membership changes.
Disadvantages
- Lengthy registration timeline due to NIS vetting.
- Professional and compliance costs can be high.
- Banks may be reluctant to lend to non-profit entities.
Online Registration Services in Kenya
Biz Brokers Kenya offers fast, reliable online company registration services for Companies Limited by Guarantee. We assist with name reservation, document preparation, vetting follow-ups, and post-registration compliance.
Why Choose a CLG?
A Company Limited by Guarantee provides a secure, credible, and sustainable structure for non-profit entities in Kenya. Whether you are setting up a foundation, educational trust, or community organization, a CLG ensures your operations are legally recognized and donor-friendly.